EIOPA’s Sanctions Report: A Compliance Reality Check for Insurance Distributors

Key Takeaways

• Rising Enforcement: The European Insurance and Occupational Pensions Authority (EIOPA) reports an increase in sanctions under the Insurance Distribution Directive (IDD), with a total of 1,510 sanctions issued across 20 EU Member States in 2023.
• Product Oversight in the Spotlight: A growing focus on product oversight and governance (POG) violations, with regulators scrutinizing whether insurance firms are truly prioritizing customers in their product designs and sales practices.
• Conduct Violations on the Rise: Sanctions related to general conduct of business rules, like providing misleading advice and failing to act in customers' best interests, are increasing, signaling a shift towards enforcing the "spirit" of the IDD.
• Industry-Wide Shifts Ahead: Beyond sanctions, EIOPA emphasizes the importance of broader supervisory actions, such as guidance and initiatives, to reshape industry behavior and enforce stronger compliance.

Full Article

Regulators are watching, and they’re not impressed. The European Insurance and Occupational Pensions Authority (EIOPA) has just dropped its latest annual report on sanctions under the Insurance Distribution Directive (IDD), and enforcement isn’t slowing down—it’s accelerating.

Across 20 EU Member States, National Competent Authorities (NCAs) imposed a total of 1,510 sanctions in 2023, an uptick that reflects increasing regulatory scrutiny. And if firms were hoping for a light touch, they’re out of luck—authorities are digging deeper into the fine print of compliance, targeting not just procedural slip-ups but fundamental failures in product oversight, governance, and fair customer treatment.

One of the most telling trends in this year’s report? The surge in sanctions related to product oversight and governance (POG) requirements. That means insurers and intermediaries aren’t just being fined for registration missteps or training failures anymore—regulators are focusing on whether firms are actually putting customers first in how they design and sell insurance products.

And it’s not just about governance. Violations related to general conduct of business rules—like misleading advice or failing to act in customers' best interests—are also on the rise. This shift suggests that regulators are becoming more proactive in enforcing the spirit of the IDD, not just its letter.

Sanctions: The Hammer That Keeps Coming Down

If firms thought they could skate by with a slap on the wrist, they might want to reconsider. Over the past five years, regulators have handed down more than 8,000 registration withdrawals and 3,800 fines across the European Economic Area (EEA).

The most common enforcement tools include:

• Registration withdrawals, especially for firms failing to meet IDD’s training and competence requirements.
• Administrative fines, a financial reminder that cutting compliance corners isn’t cheap.
• Cease-and-desist orders, used before full-blown sanctions kick in, giving firms one last chance to clean up their act.

And here’s a key takeaway: sanctions may be the headline, but they’re not the whole story. Regulators don’t just want to punish bad actors—they want to reshape industry behavior before non-compliance spirals into something worse.

Get Ahead Before Regulators Catch Up

One case study in the report drives this point home. The IDD’s golden rule—that insurance distributors must act honestly, fairly, and professionally in customers’ best interests—isn’t just a nice idea. It’s a legal requirement, and breaking it can land firms in serious trouble.

EIOPA also cautions that sanctions alone aren’t the only measure of effective supervision—broader interventions, like guidance and industry-wide initiatives, are just as crucial. But for firms that ignore the warning signs, enforcement is coming.

The bottom line? Regulators aren’t just checking boxes. They’re setting the tone for a stricter compliance era. Insurance distributors need to make sure their governance, training, and customer protections aren’t just passable, but rock-solid—because if they aren’t, regulators won’t hesitate to step in.

The GRC Report is your premier destination for the latest in governance, risk, and compliance news. As your reliable source for comprehensive coverage, we ensure you stay informed and ready to navigate the dynamic landscape of GRC. Beyond being a news source, the GRC Report represents a thriving community of professionals who, like you, are dedicated to GRC excellence. Explore our insightful articles and breaking news, and actively participate in the conversation to enhance your GRC journey.